The establishment of a national training fund and lower taxes has found favour with the business community but the Government's failure to promote profit-sharing for employees is seen as a disappointment.
The new national training fund, which will come into effect from April 6th, is a move by the Government to address the growing skills shortages in the Irish economy. The Minister for Finance, Mr McCreevy, has announced that the fund will be administered by the Department of Enterprise, Trade and Employment and will be financed through employers' PRSI.
From April, 0.7 of a percentage point of most employers' total PRSI payments will go into the fund. Mr McCreevy has estimated this should raise £120 million in a full year which will go to the Department of Enterprise, Trade and Employment. The levy will replace the current apprenticeship levy and sectoral training levies, which are paid directly to Fas and which will be abolished next year.
The training fund has been warmly welcomed by employers' groups which are reporting huge skills shortages throughout the various sectors of the economy. The Small Firms Association chairman, Mr Kieran Crowley, said the initiative was long overdue and will help small firms to engage in skills development which has been a particular weakness in recent years.
The Construction Industry Federation said the levy emphasises the need for training and suggests that as it will be funded by employers, they should also have a say in how the monies will be used.
While contributing to the fund, employers' PRSI payments will be lower as a result of the Budget. Employers' PRSI contribution rates will fall from 12 per cent and 8.5 per cent, to 11.3 per cent and 7.8 per cent respectively, according to the different employer categories.
Meanwhile, Mr McCreevy has also raised the ceiling for employers' PRSI from £25,400 to £36,600, to be introduced on April 6th, 2000.
The Government has once again cut the rate of corporation tax as part of its strategy to introduce a single standard rate of 12.5 per cent in 2003. From January 1st, the standard rate will fall from 28 per cent to 24 per cent while the minister has also moved to ease the tax burden on small- and medium-sized businesses with a 12.5 per cent rate to apply from January.
The employers' group, IBEC, said the tax cuts should encourage entrepreneurship, investment and continued economic growth.
Government inaction on profit-sharing, though, has been criticised. The Irish Software Association, said it was extremely disappointed at the lack of commitment from Mr McCreevy to reduce taxation on share options schemes for employees, despite the clear economic benefits.
The chairman of the association, Mr Gerry Jones, said a reduction in tax on share option schemes would have helped to contain wage inflation in the software sector. "A reduction in taxation on share options to 20 per cent is essential if we are to control wage inflation in the industry, retain the best people in the Republic and maintain international competitiveness."
Mr Jones, whose association represents firms which employ 24,000 in the Republic, said Government inaction on the is sue could manifest itself as a "hammer blow" to the survival of many firms and to Ireland's reputation in the global software industry.
IBEC had suggested Budget measures to encourage married women to take up employment should help ease labour shortages. This has been further reinforced by tax incentives designed to increase the supply of childcare places.